Here are the key things you need to know before you leave work today (or if you already work from home, before you shutdown your laptop).
MORTGAGE/LOAN RATE CHANGES
BNZ raised fixed rates today for terms to 18 months, and reduced its two year rate.
TERM DEPOSIT/SAVINGS RATE CHANGES
The Cooperative Bank has made some minor increases to their 6, 9 and 12 month TD rates. Gold Band Finance has raise some rates significantly.
RECOVERED?
Real estate agency commissions picked up in the second quarter but remain soft in Auckland. But overall they are back to pre-pandemic levels.
'DETERIORATED QUICKER THAN ANTICIPATED
ANZ economists expect a gradual lift in dairy commodity prices - but not before a large proportion of the new NZ season's supply has already been traded; they have cut their forecast milk price for the 2023/24 season.
PROGRESS REPORTED
Total greenhouse gas emissions fell -2.1% in the December 2022 quarter from the same quarter a year ago or -417 kilotonnes of carbon equivalents. For the full 2022 year they are down -7.1% from five years ago, or -5733 kilotonnes of carbon equivalents. Essentially it is industry that is making the savings (incl rural). Over the past 10 years, all the prioress has been from 2019. Households aren't contributing to this progress whatever time period you look at.
THE TRANSITION AWAY FROM COAL
The Government has given Fonterra a $90 mln subsidy from the its decarbonisation fund to lower the dairy giant's carbon emissions by the equivalent of 120,000 cars.
POPULAR BONDS
Today's bond tenders by Treasury were popular. $500 was offered and almost $1.3 bln was bid in 123 bids. Yields are higher than at the previous equivalent tenders.
SLOWER GROWTH
Japanese exports rose +1.5% in June, compared with market forecasts of a +2.2% rise after a +0.6% gain in May. This was the 28th straight month of growth in shipments.
UNCHANGED
The Chinese central bank left its Loan Prime Rates unchanged after cutting them in June, with the medium-term lending facility used for corporate and household loans still at 3.55%; while the five-year rate, a reference for mortgages still at 4.2%.
MORE JOBS, UNCHANGED JOBLESS RATE
The Australian labour market added +32,600 jobs in June, double the +15,000 expected. +39,300 of those were full time positions, and part-time positions fell -6,700. Their jobless rates stayed unchanged at 3.5%. (New Zealand releases its June quarter labour market data in two weeks on August 2, 2023. Our jobless rate in March was 3.4%.)
SWAPS FIRM
Wholesale swap rates are probably a little higher again today. However, the real action in swap rates comes near the close. Our chart will record the final positions. The 90 day bank bill rate is up +1 bp at 5.66% and still +16 bps above the 5.50% OCR. The Australian 10 year bond yield is up +5 bps from yesterday at 3.97%. The China 10 year bond rate is again unchanged at 2.68%. And the NZ Government 10 year bond rate is up +3 bps from this time yesterday at 4.59%, but still higher than the earlier RBNZ fix which rose +1 bp to 4.53%. The UST 10 year yield has fallen back by -1 bp to just on 3.76% so again little-changed.
EQUITIES MIXED & MODEST
The S&P500 ended its Wednesday trade on Wall Street up a modest +0.2%. Tokyo has started its Thursday trade down -1.1% with a building retreat. But Hong Kong is up a minor +0.3 at its open today, hardly putting a dent on the prior big drops. Shanghai is little-changed at its open. Both the ASX200 and the NZX50 are up a minor +0.1% so far.
GOLD FIRM
In early Asian trade, gold is up +US$6 at US$1983/oz. Earlier it closed in New York at US$1977/oz, and earlier still in London at US$1975/oz.
NZD LITTLE-CHANGED
The Kiwi dollar is marginally higher, now at just on 63 USc. Against the Aussie we are marginally lower at 92.3 AUc. Against the euro we are unchanged at 56.1 euro cents. That means the TWI-5 is little-changed at 70.
BITCOIN VIRTUALLY UNCHANGED AGAIN
The bitcoin price is virtually unchanged from this time yesterday at US$30,031 and down just -$27. Volatility has been low at just under +/- 0.7%.
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64 Comments
Japanese exports rose +1.5% in June, compared with market forecasts of a +2.2% rise after a +0.6% gain in May. This was the 28th straight month of growth in shipments.
German exports make the global economy look like it has been booming. Again, just an illusion. Actual volumes are a disaster and now that nominal values are falling, too, the economic truth is coming out and it's not inflationary. https://buff.ly/3Ol53dN Link
Who are Germany's biggest trade partners? The US and China. Exports to the US look decent but only by nominal values, the supply shock not recovery. Volumes were never really good and are now down pretty big, at levels last seen in 2017 or 2015. https://buff.ly/3Ol53dN Link
German exports to China by volume completely changes the picture of Chinese demand - and what's really going on among German producers. Volume of goods is pathetic, but it's hidden by nominal values. The real economy is volume. https://buff.ly/3Ol53dN Link
Looking at an investment property central CBD and the yield is attrocious, some 3.5% below the standard variable rate and that's not factoring in the interest deductibility expense. If I do the latter it drops to 3.5% vs 8.5%. Something has to give, that's not sustainable. Interest rates need to drop quickly and National need to win to get close to a break-even carry scenario.
Charlie Munger: US banks are ‘full of’ bad commercial property loans
https://www.ft.com/content/da9f8230-2eb1-49c5-b63a-f1507936d01b
This is a few months old now.
We have been let down for decades by politicians of all persuasions. The answer might be along the lines of Lange, 'do whatever it takes' - promise whatever is needed to get in. Then do what has to be done, regardless of the promises and the pain (The changes to the rural subsidies of the 80s that devastated many on the land)
"Something has to give, that's not sustainable. Interest rates need to drop quickly"
If interest rates drop quickly it will be because we're facing a deflationary bust - which isn't good for the economy, nor asset prices.
But it might fix the terrible yield on investment properties (i.e. the nominal values drop another 25% then the cash flows stack up - but then again, if its a real deflationary bust then cash flows will be dropping simultaneously as asset prices so nominal prices might need to drop another 30-40% to stack up).
Western economies need growth and capital appreciation otherwise it's all over red rover. Future financial commitments cannot be met without GDP gorowth and inflation over the medium term. House prices will be higher in 3 to 5 years, maybe not in "real terms" (gold etc), but certainly in fiat terms.
Agree - hence the mad panic in 2020 at the sniff of potential deflation. My guess it would only take 2-3 months of deflation for global and domestic economies to come to a grinding halt.
The rate of fall in asset prices in nominal terms would be breath taking when people realise how much bad debt they are holding. And central bankers now this - it was demonstrated by their extraordinary intervention in 2020 when we didn't even have any measured deflation - just the possibility of it!
House prices will be higher in 3 to 5 years, maybe not in "real terms" (gold etc), but certainly in fiat terms.
You may be right. But it's also possible to have lower house prices and depreciating purchasing power. Will just make the house prices head lower over an extended period of time.
NEED?
Ah yes, you're right, they're predicated on exponential growth, on a finite planet. So they were always on a hiding to nothing, at some stage (somewhere near the start of the last doubling-time, I'd have thought).
As of about 2005/8, that system's been in trouble. QE didn't do it; indeed when you peel it all back, all central banks can do is print numbers. Which they've done; now the pigeons come home. We are entering a period where the reconciliation - and shortfall - will be worked out. Weimar Germany experienced it, from memory Hungary just post-WW2 did too; this time it will be global, or at least, ex-Brics global.
There will be no place in a post-growth world for usury, nor, increasingly, for rentier free-rides atop tenant activities.
Humbleness may well be a cultivatable - and useful - attribute, going forward...
Do you think that wherever we are at the moment isn't planned? Of course, it is. It doesn't matter whether you or I think it's right or not, it's what is seen as an economic imperative by those who actually set the Rules. And no matter who wins in October, that will remain; the RBNZ being set in place for at least another 4 years. In fact, anyone tampering with the settings is likely to set the bomb off, and if we think the OCR is high now, just try making some changes to what's been put in place and watch what happens.
Why do we need interest rates to come down? To mis-price risk?
It’s the cost to buy/build that needs to come down.
Spoke to an owner of an ITM yesterday and he built his house for sub $3k/sqm 5 years ago. It would now be $7k/sqm. Some is labour but a lot is product. So despite being told we pay more because of small volumes, now with high volumes prices have gone up.
It’s going to get ugly as things get unwound.
Isn't that the case for everything though? We're being force-fed a higher population future with the false promise of more economies of scale, abundance of skills and whatnot.
Think back over the last decade and a half when we've added a million people and how badly things have turned out for everyone but a handful of vested interest groups.
Yes. It is the elephant in the room. Noone is asking what NZs population should be and what rate it should grow. No politicians are addressing it. Maybe that is because they then need to also plan for infrastructure. Then we wonder why the health system and roads are over design capacity, and we have a housing crisis. Politicians only address bandaid that are a direct result of the problems.
I've mentioned on here a few times that I believe building materials suppliers/manufacturers are gouging.
When mortgage rates dropped from 8% to 2% in the space of 10 years resulting in a huge increase in borrowing power, surely the components that go into building a house will rise to capitalize? If not, then the respective pricing teams are doing a very poor job.
Canadian politician suggesting that the govt needs to step in and subsidize mortgagees. Nobody wants to take any pain.
“For a family that took out a 25 year variable mortgage recently, they're gonna see almost a $1,700 increase in their monthly mortgage payment,” Singh said while in Windsor Wednesday morning.
“In Spain, they force banks to give lower interest rates to families that are struggling, like Portugal has put it in a subsidy for people that can't pay their mortgage right now,” Singh explained.
https://windsor.ctvnews.ca/federal-ndp-leader-draws-attention-to-rising…
We just need to leave the bloody markets to themselves to correct!
If something is over price relative to its stream of cash flows, its price must fall.
Tinkering around and trying to avoid this is like fighting nature - it is what idiots do thinking they are greater than god/the forces and principles that govern the universe.
Funny how an increase of 20 - 30 cents per liter of petrol makes people irate and is perfectly fine to bitch and moan about.
But people who genuinely bought a house to live in for the market price at the time, find themselves in severe financial stress over an extremely short timespan because of some central bank lever pulling, it's "well you should have known this, nobody wants to take pain etc".
Or 'tough luck, should have been born 20 years earlier, but all the best out there in life' - what I have heard on a number of occasions from typical 60 year old to typical 30 year old.
Looking forward to a time when the generations in the mature age range do their very best to make things better for those that follow them - as opposed to pulling up the ladder behind them and using a 'tough luck' attitude.
XRP now miles ahead of the ol' rat poison on price appreciation year to date - 140% vs 80%.
Demand for XRP out of Asia (primarily South Korea and Japan) is off the hook at the moment. It's one crypto that normies tend to go for because it's relatively cheap and the use case makes sense to them.
One of my XRP purchases just hit 5x and average return of 130% on each purchase.
Happy days.
How much money do you actually have in Crypto?
Golden rule among the OGs is not to talk about fiat equivalents in public. And it doesn't matter if you have $10 mio or $1000 in digital assets. Play within your own boundaries. Good place mentally to start is only invest what you can afford to lose. Much like any other asset.
And all power to you stumping up for a property. But these are completely different asset classes.
So you cannot disclose what you have on a totally anonymous website ? Kind of interesting golden rules around crypto, bit like the one about disclosing all your gains but keep quiet on your losses.
Well if it makes you feel something, highest price ever paid for ol' ratty was approx USD50K in past 3 years. Down 84% on one altcoin.
Previously invested in clean energy companies Dyesol and Ceramic Fuel Cells. Both went to zero.
Kind of interesting golden rules around crypto
Only interesting to the ignorant.
For those is the know, this is a new type of money, with new conventions, new ways of doing things. Gone are the staid old beliefs of measuring a successful investment in terms of net positive returns. The new success comes in selectively highlighting all your positive achievements, not focusing on the negative, and performing unlimited free marketing of your chosen investment.
Grossly inaccurate. How did you come to 3/4? 88% of Bitcoins record is in the green. Only if you had bought between 30-66k, you'd currently be underwater, which is less than 12% of the time Bitcoin has existed.
On chain data shows that accumulation and growth of Bitcoin both in currency and network are breaking constant new all time highs.
The data doesn't lie, one of the beautiful things about it is the complete transparency. Please, painter, explain how this is wrong :)
https://www.blockchain.com/explorer/charts/bitcoin-profitable-days
No, the data literally shows, anyone that has invested between 8/01/21 to 07/05/22 is currently underwater. That is just over a year in the last 14.
You're simply wrong and can't admit it. Great example, went heavy in 2020 at an average of 10k USD a coin, at 30k currently, that's 300% painter...
You're telling me 75% of the millions of people in Bitcoin all got in in a 16 month period only?
The on chain data shows the number of new wallets accumulating Bitcoin is increasing still at new rates and the number of wallets holding at least 1 BTC is at an all-time high.
Keep arguing your opinions as you'd like, but they are wobbly with no backing.
Just too many potential issues with Bitcoin to waste my time on it. Yeah it could double but with only a few thousand on it who cares. The longer it stays stable the worse it will get as well, people are only in it for wild fluctuations, how else are you actually going to make money on it ? its not a currency and its practically useless until its converted to Fiat so you can actually use it. I put money in a TD and its like 100% maintenance free, I don't need to waste a minute on it. You can put hundreds of thousands on a TD and still sleep at night, the chances of waking up in the morning and its gone to zero are practically zero.
By JCs own admission crypto is an "assymetrical investment", i.e. a long shot.
Which is fine, except people usually don't spend so much time bragging and boasting about as yet unsuccessful long shots.
It's about two steps away from fantasizing about what you'll buy with the proceeds from a lottery ticket.
Annualized return of BTC from 2011-2023 is 151%. Of the 12 years during that time period, BTC has been the best performing asset for 9 of those years.
Gambling is all about probabilities.
https://twitter.com/saylor/status/1680638074697441282/photo/1
151% annualized gains for over a decade and you're still picking a 6% TD, while inflation is well above 6% in real terms.
You've just admitted you're a loser and you love it.
May I remind you, that bitcoin has yet to fail, while banks fail often, and are only protected by bail outs which then further devalue your dollars on that pathetic TD rate.
Zwifter, as an example. You're like an old man saying "why should I get Netflix, when I can just have sky. I can record and watch what ever I want whenever, and I don't have to rely on pesky internet issues", while younger generations see the pros of Netflix and the cons of Sky.
Households aren't contributing to this progress whatever time period you look at.
From the report you cited:
Household emissions have risen 8.9 percent since the quarterly time series began in March 2014. However, over the same period, average emissions per household fell as the total number of households increased at a faster rate than total household emissions.
If we green-light population growth we will need more stringent measures to deal with emissions. We can't just easily export household emissions.
Haha too true. Every new human is a lifetime of emissions and consumption yet we have a system failing as the premise was always that the rate of humans would always increase exponentially in a materially finite world. The only way to avert the chaos is large scale cultural and behavioural change yet change is the one thing humans aren't spectacular at on a grand scale.
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